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The country's chemical makers were hit by COVID-19 and weakness in China.

Source: C&EN tabulations based on company documents.

Japanese chemical makers were hit by pretty much everything during their fiscal 2019, which ended on March 31, and they acknowledge a challenging year ahead because of COVID-19.

Every large Japanese chemical maker C&EN surveyed reported a decline in sales for the year, and all but one, Shin-Etsu Chemical, posted a drop in profits.

COVID-19 was partially to blame for the bad results, but only late in the fiscal year. Even before the pandemic, Japanese firms suffered from slow sales in the auto industry, slumping prices for petrochemicals, and sluggish business with China due to that country’s trade friction with the US.

“In the global economy, business confidence deteriorated rapidly in the manufacturing sector,” Teijin says in an earnings announcement. The fiber maker reported a 44% decline in profits for the fiscal year on a 4% drop in sales.

Teijin points to a pullback in Chinese manufacturing due to US-China trade relations and a decline in car demand in China and Europe. In addition, the firm says, the spread of the novel coronavirus impacted “production and consumption activity around the world toward the end of the last quarter.”

Mitsubishi Chemical experienced a 68% decline in earnings and a 7% drop in sales. A major culprit for the company, Japan’s largest chemical maker, was its petrochemical unit, which suffered from falling selling prices. The company shuttered a polypropylene line in Kashima, Japan, as part of an effort to improve efficiency.

But news for the year wasn’t all bad. Shin-Etsu managed to escape with only a slight sales decline and even a small improvement in earnings. The firm cites strong polyvinyl chloride demand in the US, firm cellulose derivative sales to the drug industry, and good performance in its semiconductor silicon unit.

The spread of COVID-19 created some demand in food and medical markets. Kaneka, for example, says its nutrition business benefited: “With more and more people eating meals at home, demand for products such as frozen food and instant noodles increased.”

Looking ahead, Teijin predicts it will see gradual improvement during the second quarter. Ube expects recovery to begin in its third quarter.

Most companies refrained from making specific financial predictions due to the uncertainty around COVID-19. Mitsui Chemicals was an exception, saying it expects its sales for the 2020 fiscal year to fall 15% and its earnings to drop by 47%.

Mitsui also gave the most alarming warning about the year ahead: “Growth rates in some countries and regions could fall significantly short of the levels seen during the worldwide recession triggered by the Lehman Brothers bankruptcy.”